By NICOLE MURRAY
California continues to dominate the luxury homes market, but that could change as communities fight for the country’s wealthiest individuals.
In a recent Point2Homes.com study, analysts looked at which cities in the United States have the highest share of luxury homes worth at least $1 million for sale. Results were categorized by large, mid-sized, and small cities.
They found that listings above $1 million make up around 64% of the for-sale market in Los Angeles.
LA also led the ultra-luxury sector, with almost 12% of its homes priced above $5 million.
Glendale (66%), Huntington Beach (63%), and Oxnard (43%) in California were found to be the three most luxurious mid-sized markets with high percentages of the homes for sale listed at over $1 million.
Mike Leipart, managing partner of The Agency Development Group, told The Mortgage Note that amenities are important to luxury buyers in California.
“In California, there are beaches, Hollywood, Disneyland, national parks, and people’s lifestyles are built around that,” Leipart said. “People may move to a different area because of a home they fell in love with but they still want good food, similar stores, and to keep their lives the same but in a different local community.”
Some luxury buyers have migrated from California to places such as Las Vegas.
Doug Ressler, manager of business intelligence at Yardi Matrix, said lifestyle markets such as Las Vegas can compete for wealthy residents who work remotely.
“Covid really changed the landscape on luxury homes because for the first time, people were untethered from their employment,” Ressler explained. “We are starting to see people veer away from the cities you would suspect such as Los Angeles, San Francisco, and New York City, and instead, moving into lifestyle markets like Denver, Las Vegas, and the Carolinas where vacation spots are transforming into residential.”
Rob Jensen, broker/owner of the Rob Jensen Company in Las Vegas, said people want to be close to the amenities cities like his have to offer, too.
“Anyone can build luxury homes way down South but if it is out in the middle of nowhere, it loses its attraction compared to neighborhoods with lots to do,” Jensen said.
Jensen said modern homes with no renovations necessary are the most sought-after in his market.
“New luxury homes offer a huge advantage because most people don’t have the money, the patience, or the vision to revamp an older home,” Jensen told The Mortgage Note. “Someone moving to a new town or who is purchasing their third or fourth property wants to start enjoying it now. They don’t want to buy it, and then wait three or four years to be able to move in.”
Smaller markets, which Point2 analysts said shouldn’t be underestimated, can also have a high percentage of luxury homes.
More than half of the listings were priced above $1 million in Bozeman, MT, (62%) and North Bethesda, MD, (55%) according to the study.
Bozeman has a population of 54,500 and North Bethesda has a population of just under 50,000 people.
Smaller communities with room to grow could attract new luxury buyers in the future, especially as people look to retire in relaxing, nontraditional settings.
At more than 70%, East Honolulu in Hawaii has the highest share of for-sale homes over $1 million in any market. The median sale price in East Honolulu was $1.09 million in July, according to Redfin.
East Honolulu was listed as a small market in the Point2 study.
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